MARKET TIMING AND SOUL SEARCHING
Having read the excellent discussion by tekboy and Mike, it brought back memories of what I posted back in early April when the NASDAQ went from 5000 to 4500. Needless to say, I was upset for not taking profit when everything was telling me to do so. I felt silly shortly after because we climbed back to 5000, and once again I didn't take profit. The rest is history as I sat and watched in disbelief and paralysis as my holdings lost over 50% of their value.
Given my background of being a mutual fund investor, and 1999 the first year of me investing online, I have been faced with the decisions of whether to buy, sell or hold. I still don't know which strategy works better.
This is due to the fact that I don't have enough years of experience as an investor in the stock market.
The question now a days is, do I need some form of guidelines to protect my capital gains? Be it through selling or hedging against a downturn. The one thing that became very evident in the recent downturn, was that I was poorly prepared to deal with it. I read various threads on how some posters where buying puts, writing covered calls and some were plain old selling and staying out of the market.
Well I did not sell, I knew the text book explanation of what options and covered writing are, but having never used them, experimenting with them in market conditions like this one was out of the question.
Given the recent education, although a very expensive one, which I got from the stock market, I have started reading quite a bit on TA, options and leaps. Had I read this in February, I would have done a lot of things differently.
IMO TA is a tool, like everything else, that helps to a certain degree. It is not correct all the time, by any means, but it will probably make you a more astute investor. There are investors out there that are very good at it, and to dismiss them is premature, unless one has used TA and achieved inferior returns when compared to LTB&H.
Mr.Moore has just stated in plain english, that Gorillas were overvalued along with the rest of the tech sector. In TFM, I don't ever remember reading that, as it was my understanding that Gorillas are always undervalued.
IMHO one might become a better GG using valuation metrics and some form of TA before one makes a purchase. One might also argue to use the same philosophy to take profit. |
